tv Power Lunch CNBC August 1, 2019 2:00pm-3:00pm EDT
maryland mortgage program that we're trying to get back on the market give people an opportunity up to 15% of the value of the home can be used to pay off. so you could pay off 30,000 in student loans. >> almost like you don't want it toob too successful. >> we've sold out of everything and have now expanded the program. it was a pilot, but it's working well >> thank you for joining me. thank you for commenting on the news thishogan that does it for the change. "power lunch" will take things over starting now. thank you very much and never, never a dull day. we begin this hour with breaking news a new shot fired in the trade war. president trump saying there will be an additional 10% of tariff on $300 billion of goods from china starting september 1. eamon javers has the latest. eamon. >> tyler, i'm told the president's recent tweet here announcing this increase in
tariffs on china came in the wake of an 11:30 a.m. meeting with secretary mnuchin and robert light hauser, the u.s. trade representative, who briefs him on how things went in shanghai this week the president issuing this tweet suggesting that he's frustrated with the talks and frustrated with china's lack of follow through and also to stop the sell of fentanyl in the united states the president saying that china had agreed to do that and it never happened and as a result, americans continued to die, so as a result, he says on september 1st, yithe united stae is going to put a small tear i have on the remaining goods coming in to our country from china. he says he looks forward to continuing positive dialogue with china and a comp help sieve trade deal and ends on a positive note saying he hopes the future between the two countries will be b bright this sets up a dynamic with the trade talks in washington which
is going to have a little edge to it as the u.s. side and the chinese sit down the president's leaving himself some wiggle room here by putting in this 10% rate he could increase it from there if he doesn't like how things go in that september negotiating session. this is the president sending a a trade shot across the bough here to the chinese side we'll see how they respond, if at all, later today. >> can we conclude the talks that were just concluded in shanghai didn't go well? i note they ended 45 minutes early. t never a good sign. number one number two, the comments out of the chinese foreign ministry were pointed and seemed to take aim at the president and some tweets that he had issued prior to the talks >> i mean the president issued those tweets just as the two sides were sitting down to dinner in shanghai this was all going on in real time. you had the negotiators in shanghai sitting down
face-to-face the president tweeting his suspicious the chinese were stalling on him and trying to wade him out through the 2020 election the president says he thinks the chinese would rather negotiate with a democratic successor than with this president. not clear that's what's going on on the chinese side although they'd have reasons for trying to play this out the president gets a report at 11:30 from his top negotiators then we see this tweet following up you can connect the dots between the two and say the president didn't hear what he wanted >> thanks very much and if you hear anything more, i know you'll holler. >> down to bob pi sani on the floor of nyse. we're now reeling for the second straight day here. >> and down yesterday and up this morning on the ism. what's it worth, 10% about 40 point on the s&p 500. we're down 15. just sitting near the lows of the day. up essentially 25 earlier in the day. number of sectors affected here. rerk dollar down, interest rates
down and generally, that's not good for the bank so all of the big banks and it doesn't matter whether you're talk iing about money center banks, regional, fifth third or the big banks like citigroup all are down 3 or 4% the big dwloebl trade names, boeings, caterpillars, all down about 2 to 3%. everything's town about 3% global industrial names na that group. the vix, we just moved up here, we're at 17, almost 18 that's about a two month high for the vix and i think the bigger problem the markets have is just the backdrops. talk iing about all day, going into august. you've got a a market that's up 20% on the year. you got flat earnings. that means it's pricey a bad month for the dow. trade tensions ratcheted up and rate cuts unstecertainty. trade and rate cuts that have f moved the market most in the last two day, not good news on them little wonder we're down today back to you. >> thank you
let's break this down more talking about what led to the president's announcement just a short while ago. what it means for further trade and negotiations joining us on the "newsline" is fred kemp, president and ceo of the atlanta council and fred, you know on the one hand, we had indications all week this was not going well on the other hand, it feels like it came out of nowhere this is a big step to expand $300 billion a lot of these companies may not have had to deal with this at all yet, rig >> this is going to come as a surprise to a lot of people b and most of all, the chinese it wasn't expected, but it is consistent with the way president trump has approached this clearly the message his cabinet members are bripging back from china may be willing to wait him out. what trump said is i'm not going to let you wait me out i'm going to hit you with further tariffs. you have to understand, it's not just tariffs it's the separating of these two
economies. so you have a lot of american suppliers ranging to go pro to apple and others already changing their supply chains and taking a lot of business away from china and giving it to other countries in the region and mexico and vietnam and other places so there's a knock on him and this is taking place just after the chinese announced that their economic growth had deacceler e deaccelerated to its slowest pace in decades. since 1992 so this is really interesting move on behalf of the president. now we have to see how the chinese respond. >> my guess is that if you ask the president, if you poured truth serum into him, he would say what better time to hit the chinese with tariffs their economy is weakening ours is strong and may be strengthening. why not do it? and he wouldn't be wrong about that, would he
>> he wouldn't, but the one thing that's interesting is is they have weapons they can use in an undemocratic system so actions they can take against u.s. companies on the ground operating outside of the trade system tariff system that we can't really undertake in the united states. so they have weaponry they haven't used it and they could do that. the other thing that's taking place now and i don't think this is something the chinese think is unrelated there are protests taking place in hong kong china released a dramatic video today showing off its army's capabilities as the head of the armed forces in hong kong said the up rest in the prons had seriously threatened the life and safety of the people and shouldn't be tolerated so you have a political situation in hong kong where the chinese have argued that the united states is dark hand of course we aren't, but that's what they're arguing so this is not just an economic test this is a test between two
powers, one of them authoritarian capitalist, the other democratic capitalist. it's a systemic struggle and could go op for decades to come. >> while that play is out, we saw the u.s. manufacturing surveys, the competence measures take a hit when we ratchet up to 25%. what do you think the fallout will be from this 10%? is it going to be relatively small because it's just 10% and companies are starting to get used to this news flow or do you think it could be quite large? >> i think the direct impact will be large enough, but it's the indirect impact that's going to be larger people looking who used to look at the chinese market as the market that was going to drag their growth and they're going to have to reassess and look at political risks going forward and say you know, this is going to go on for a while so i have to look for other solutions. once you move a supplier from china over to somewhere else, you're not likely to move it
back anytime soon. you're going to find china doing more to pump money into its market looking more, getting domestic demand pumped up infrastructure projects. they have a lot of liquidity, but they build up quite a bit of depth trying to get themselves through this period of time. so i think the knock on impact i think the tariff impact is is dpoipg to be large i think the knock on impact in this sort of new almost cold war situation is going to be even larger >> fred, thank you appreciate your time, response and thoughts this afternoon. >> so is the trade war still the biggest risk market or does this almost ensure a more aggressive policy of rate cuts from the fed? scott bren is a senior global equity strategy with wells fargo. art hogan is chief market strategist with national securities let's pick up there and talk about what this could mean over
the next couple of months to equity investors as we now have tariffs coming on september 1. another set of talks in september in washington. but tariffs now take center stage once again >> they do and of course it's in a real bad place monetary policy doesn't help what's about to happen and the real problem is when we step back and look at evolution of tariffs in china, the remove to $250 billion worth of goods sort of landed in the middle. it was intermediate goods. wasn't the finished goods. you look at the basket the remaining $300 billion is directly affects what's going right with the united states economy. 80% of that basket directly hits the consumer >> of the 300 that will now be subject. >> and they had not been hit before that's why you're seeing the u.s. economy consumers actually been -- the corporation and had great deals but had been hit much harder i think this strikes at the strength of the u.s. economy very hard and they're turning
the time where the u.s so i think this is something monetary policy is not going to fix if we continue to educatisc in time, the market's going to have to go a lot lower >> it goes beyond. >> 100%. >> scott, the market was up 300 plus points today and a bounce back after yesterday's swoon now down 200 on the dow. is there any way to overstate how important tariffs are right now? >> well, you know, ty, in your segment before, the top of the hour, you know kelly said her reaction was holy cow. and my reaction was very, very similar. not exactly similar and i can't say what it was on television, but i mean you know -- >> may have come from cows >> that's right. we had a great bounceback day going. it made sense to me what the s&p 500 was doing. after yesterday and into today but clearly as art said, this
trade situation, it is a huge deal and the market is is going to rt very negative ly to trade news now do we believe that if it's negative trade news. do we believe there's going to be a trade deal? we do. we don't think the market is required >> why do you say that now everything, everything right now does not point that direction at all. >> well, now i think that you know for us, basically, these two economies, we kind of need each other you know they're big markets, the two biggest economies in the world. you know we have one controlled economy. ours is not controlled by the government but this is very important for confidence for supply chains. for overall trade. you can see in the earnings that are coming through not only here in the united states, but globally, i mean this has been a head wind for earnings look at companies in taiwan and
south korea that export into china. tech companies their earnings are down 25, 35, 40% in the fourth, first and second quarter here. this is a big deal with 40% of the revenues in the s&p 500 coming from outside the country. we need help from these other economies for our s&p 500 companies to meet these earnings expectations this is a big deal we don't want aadditional head winds op trade >> that said, art, the reason why look at walmart stock again. while it's reverse lowered today, again about a to to three percentage move. it's almost positive we're you know, they've mitigate ed their exposure the to china it's not huge. they sell a lot of food. 10% tariff on finished goods, are you going to see u.s. suppliers pushing back saying we're not taking that price or maybe absorb half and pass half along or because the economy is so strong, we don't notice
does it continue to hurt business investment more so than actually have a real impact on the u.s. economy >> absolutely to the extent you can get that accomplish ed and either find another source for that good or push back and try to split that. it's still affecting your margins and it affects to a larger extent the lack of confidence that businesses have right now. so much larger part of what's going on in the u.s. china trade war is is not the math the economics of what 25% is on 250 billion. it's the confidence factor that's just not there. you stop making decisions. you put off decisions until there's an end game to this. this feels like this just move ed that out. this is a much more elongated u.s. china trade war the market was able to conpartmentalize this and say as long as we don't escalate, we can deal with what we're doing and now the market's been thrown out. >> there's lots of speculation in the market right now, i'll ask you, whether you think because this president is frus trayed the fed didn't do more yesterday in saying here's a way to get you to do more. is that reading a little too
much into what is is played out this week? >> i think it is i mean i think every president wants lower interest rates it's just that pump vocalizes that strongly. so i think that the trade negotiations were frustrating. you mentioned that lighthizer and mnuchin, the meeting was cut off early. the president had his briefing and reacted. i think these are different issues, but certainly, the president is well aware that in an easier interest rate environment, that may cushion some of this blow, but you know, you look around the world. we've had very low interest rates. it hasn't necessarily produced the jai gragigantic growth that basically zero interest rates would have produced in any other cycle. so this could be a pit pushing on string situation, but what we don't want to do is is we want these global economies to stabili stabilize. increased trade frictions not going to help that happen and is
is probably going to make it deteriorate. so we're going to see positive headlines, negative ones like we just say you have to be ready for that in the coming months and probably into 2020. one good thing is you do know the central banks are on the market side. >> i want to get quick answers from both of you art, you first then scott. you. in light of this, and in light i think it's fair to say that the trade tensions just got a little worse. over the last three days what do i do with my portfolio that i might not have done on monday >> i'll tell you this. i think this makes you more defensive if you weren't already. with things hanging out there, brexit -- >> utilities >> health care i think that's appropriate has been for a bit but i think even more now because this is going to drag out. the biggest concern the market has longer
>> we don't want them getting defensive. we want them nor neutral and we want to look for opportunities we'll see what happens at the 200 day moving average, which is 27.90 in the s&p 500 it feels like there's probably a good chance we're going to see h that level >> i tell you the phrase that stood out to me in this first block here 16, 17 minutes in from fred kemp was we are in the middle of a systemic struggle that could play out for decades to come. i don't think that understates it thank you. >> thanks, guys. >> retail stocks are falling today because the president has said these additional tariffs are going to be imposed on china. >> i guess the key thing here is that an additional 10% tariff on china will make their goods more costly and that's perhaps why we're seeing a notable reaction in a number of retailers that source of produce goods inside china. look at walmart starting with the world's largest retailer
basically now flat on the day although you saw the intraday reser value on shares of walmart. nike china is the fastest growing market with greater sales accounting for a large%. shares of nike off the lows, but still down about 3% then restoration hardware, remember this is wup of those names that in its past earnings report, the company said it's going to be moving some production out of china because of higher related costs associated tariffs which got two upgrades today is now down 2% and then sharp declines in best guy and kohl's you're seeing notable weakness in those two names best buy down nearly 9%. tyler, you and i were discussing two days ago we're seeing this push by u.s. companies to diversify their supply chain out of china, so you have to think this tweet will really accelerate that need to broaden their production outside that country. >> i think that's true
the diversification and not just as we were talking a couple of days ago, not just to vietnam. >> not just to vietnam countries like malaysia, thailand, philippines, all of which have been trying to court these u.s. companies that are looking to diversify their production >> thanks. >> these are all the names our strategists were just talking about. best buy, cat pill lear. coming up, we continue to monitor today's reversal as stocks fall on these trade tensions with china. the dow is down 203 and check out energy the dollar's weaker. you might have thought that would help something like crude today. holy cow, it is plunging down nearly 8% we'll bring you the closing numbers in ten minutes -driverless cars... -all ground personnel...
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zblnchs welcome back. welcome back to "power lunch" with a dramatic afternoon. stocks making a huge reversal when the dow was up 00 points. we are down 200 now. apple, boeing, caterpillar hard est hit by the president's announcement that he will be imposing new tariffs on china starting september 1 phil, it's not that these companies are hit directly by these expanded tariffs, they're the names most sense the tiff to this idea there's not a trade truce per se with china. >> correct boeing gets about a quarter of revenue from china, chinese airlines there's always been a concern
with investors that as you look at the trade negotiations and what's going on with the discussions about huawei, whether or not the chinese retaliate in some fashion and if you were going to retaliate, who would you go after in the united states the biggest exporter to china, ths boeing not to say that's going to happen, but that's the concern that you see trade tensions ratcheting up and shares are down almost 1.5% almost $5. that's the concern that's bringing down boeing and when you look at the automaker, they're largely down in siympathy with the rest of te market in fact, a good example of that is is general motors earlier today, they reported q2 earnings beat the street by wide range on the bottom line by 20 cents. also beat on revenue they were up earlier in the day. now you see gm along with ford and chrysler trading lower let's look at shares of tesla. the reason tesla has turned negative is because the concern is this is a company that's building in california
exporting to china and yes, they are building a plant in shanghai it will be up and running later this year, but until then, they are selling u.s. made vehicles in china >> looks like we lost phil's uplink there so we're going to take a quick break. up next, the trade iing nation a will tell us about the one sector that could be the key to the market's next move i bet they didn't plan on what they're going to be talk iing about an hour ago. energy getting slammed as trade tensions rise adding to the pain the sector has seen this year and a top anysalt will tell us what's next on that. ♪ let's go! ♪
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welcome back to "power lunch. ia swift reversal for the semis tanking after president trump announced the next round of tariffs. the trade sensitive chip stocks tracking for their worst week since a may sell off and after being up this morning. let's bring in your trading nation a beacon of where the market and risk appetites might go. what are they telling you right now? >> well, no question
for 25 years, it's a great indicator for the entire market, but the last two years has been particularly so. it topped up last year then led the market higher in the first half rally this year the problem is you know it looked really good for a while broke to a new high, but only a slight new high. the it's curled back over and as of last night's close, the it was testing its trend line from the june highs, but now it's broken below that with the news. i would have said an hour ago that it's not a big a deal we've had a 25% rally over the last two months, so pulling back 5% is not a big deal now we're below that trend line. that's a b problem problem the mat d chart is is curling over in a negative way, so this new thus is something we have to keep a close eye on. whatever lows we make today are going to be important that we told them. it's not going to be good for the group or the market in general. we still got month to go before
these tariffs are imposed, but we'll see what happen, but this is a concern >> at least the yellow light mark, looking company by company, sub sector by sub sector what stands out to you within i semis? >> i guess all it takes is one tweet to derail two months of positive momentum. the semisoftware relationship is important to watch when semis are out perform iing, that's typically bullish that's been the case over the last few months. not so over the last week or so. within the sector, there are some countries that are crushing it you need to be selective the way we like to play this is to find a company that has exposure to thehighest growth markets we want to play. ai, autonomous vehicles, gaming center that company is nvidia still 40% off oits its october high and has ability to play catch up got whacked because of some cry crypto exposure.
probably just over 160 bucks right now. so i think there's upside from here >> nvidia is not one that's recorded earnings. guys thanks for checking in. for more, head to our website or follow us on twitter at trading nation >> thanks. stocks are continuing their major reversal the dow is down 226 right now. all the major averages down. more on what is going on with your money, what's happening with tariffs when we come back after this quick break don't go anywhere. that's it, that's exactly why i hate working with you.
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the judge has ruled there's no criminal case against a man who left his 1-year-old twins to die in a hot car while he went to work a grief stricken juan rodriguez said he just forget they were in the car. republicans on the senate judiciary committee advanced a controversial immigration bill as chairman graham upended the rules to muscle through the detention bill which democrats o oppose >> i don't want the committee to become irrelevant. i don't want bills like to to go directly to the floor and for seven week, i've tried the best i know how to find a breakthrough and i was unable. so i'll blame me if nobody else, but i am not going to stop with the process. it is now time for us to move forward and get this bill out of committee. >> and while cleaning out some ips from his childhood home, scott amos stumbled upon a bag with an old video game in it it was a 1987 sealed copy of the
nintendo game, kiddic russ it was a christmas gift his mother forgot to gif him it could fetch as much as -- because it wasn't opened >> cash will be trash. thank you. market losses are accelerating the dow industrials off more than 200 points. let's go to bob pisani for a quick check on the markets bob? >> it's cost us b about 50 points on the s&p. almost 500 points on the dowment just take a look hejust in the last hour. we're back to where we were in start of july. you can see some of these stores, some of the electronic retailers like best buy. notably weak here today. i think it's important, buy's ceo came out a few weeks ago and said the impact would be felt in
terms of highest costs to consumers. so buy's weak and department stores are weak as well. banks, we got lower rates and affecting all the banks. doesn't matter whether you're dealing with regional banks or whatever big money center banks like citigroup on the weak side caterpillar was 132. 132.5. it's down to 128 or so 126 even more in the last five minutes i've been standing here. finally, the vix at 18 it's been a few months that's not surprising. remember the two things that have moved the market most this year, the direction of interest rates and tariffs and trade both in the news and not in a good way in the last 24 hours back to you. gl thank you very much oil, big fall sharply. leslie picker is following it. >> hey, tyler. oil plumet iing today. wti down 8% right now. 53.92. that's the biggest loss for wti
on a one-day basis going back to all of 2019. same thing with brent. down 7.1%. biggest losses for those two in the entire year. these accelerated losses come after trump announced those additional tetariffs on septembt the escalation of the trade war is spark iing concerns that demd for oil will falter in a weakening global economy, but oil is already down earlier in the day and that drop came in response to the fed's decision yesterday to cut rates contributing to an overall risk off environment. guys >> leslie, thank you we're going to talk much more about this oil is sinking on the latest shot in the trade war. it's dealing a blow to the already battered energy sector how will falling oil prices impact things further? paul is is here. help us understand what is happening today. first of all, the dollar's weaker crude is crashing.
it had its worst day since 2015. your stocks were terrible even before that move so what do you think is really going on here? >> well, china's been the dprout driver of oil for 15, 20 years now so anything that goes bad with china is is going to exacerbate concerns that were significant about demand and the fact we have too much supply so the other extraordinary thing we've seen here is the situation in the middle east extremely tense, but oil can't get out of bed because there's so much capacity and so much u.s. production growth capacity is going to sit there in saudi, middle east. what we have to also get rid of is some of this u.s. production growth that's b probably going to take lower. >> we're going to hear from chevron, now 2%. also from exxon tomorrow, but today, one of the better names in the sector, down huge what is that telling you b about everybody else >> well we're hoping to hear from chevron we'll see. no it was a shock they're a highly regarded
company. good play on the perm yum and management have just misjudged how to manage market expectations it was a shock at results last night. the market was shocked at what has been b a premium stock so the issue was that highly regard aed therefore it's coming off a higher base and when you have these misses or disappointmented in terms of what they reported, that's why we got such an erratic sell off in the stock this morning >> is there anything on the horizon that would regress the fundamental problems in this crime, which is a lot of excess capacity and falling -- >> you know what the cure price of those rates looking scary. the side the very mature not with standing china's importance the fact is is a really strong year for demand would be 1.5 million barrels a day. so you can really only expect around a million at best a variation in that metric
in demand, which is the most important thing in terms of how the market sees the world because everything else follows from there the moment we arguably got a million barrels day too much supply growth. >> wow u.s. supply growth because nothing else is is growing that much there's also non non opec growth the total looks as much as a million barrels a day without further concerns the way you'll balance that because the other supply coming is very long cycle big mega projects that are going to start up and run is some of the short cycle stuff and that's where the concerns center around >> we were just showing the price levels brent is barely above $60. wti is around 54 and change. down 7.5% today. so what levels are we talking about? a major reset. lower or what happens if we stay where we are today >> well, it's fascinating b about 55 is the fascinating price for wti because that's the
point of zero free cash flow for the average u.s. player. so the market's down at this point. of challenging the strategy of the managements in terms of what are you going to do at 55. are you going to generate free cash flow? keep growing at 20 plus percent. the question will be continue to be asked by the market obviously to the downside potentially if we don't see some tempering of growth and reduction in cap. the market is begging these companies to spend less and grow less >> what if i'm long some of those companies that are exposed? what do i do >> here, it's very tough a good example is con cho because they have such good assets it is very, very important for the future of global oil so i think our view is that one way or the other, whether it's concho getting itself out of its mess and have a good 2020 or the potential for m and a is there for the case of o the names. but it's been a tough break. i wouldn't advise you to sell it here at all. i would do the opposite. but we were certainly
disappointed by last night's results. >> is this going to slow texas at what point do if you're saying the market wants it to spend less to grow less. are these regions going to remain strong or start slowing >> for year, i've never been able to quite prove this, but i've argued that high oil prices are good for the u.s. because of the importance of the primary aspect of investment in oil in places like texas and the fact that the potential is there for u.s. consumers to become more efficient in using oil so it wouldn't be bad for people to have a bit higher prices in my view. it would be more efficient so you know, we're looking at a very interesting balance in market one thing i didn't mention is it's pretty depressing because this is about as good as you get in oil we're in the mid f of pique demand in summer and things get weaker throughout the year and finally, you've got to think about the dollar it indicates oil prices as well. so it's pretty strong. >> we're sorry >> pretty scary take out there for us i'm afraid to say
>> paul, thank you really good to see you to the bond market shall we. rick santelli is tracking the action there and with that dollar hi, rick >> yesterday after the announcement, they all sold off taking the ease iing away now look at a two-day of september. but more important, a two-day of december remember, it's log jam a building 30 h day contract one after another. december gives you that glimpse. the headlines regard iing ta tariffs, they tarted to rally asking for more easing look at a two-day of two-year note yields. they are down as they sit now about 15 basis points. ten-year, down about 12 at 128 189. november of 16, ten-year closed here and as for the dollar index, let's be nice to the guy that's still winning it settled at 98.52 yesterday, but 98.01 on friday.
dow down near session lows down 300 points. that's about a 600-point reversal from the highs earlier today. what about apple those shares down 2% has president trump has threatened to issue, he's announced he's going to put further teariffs o china. hi, josh >> so tyler, apple stock did drop after president trump's tweet there that the u.s. is going to put this additional 10% te tariffs on goods from china. the company does all it design work here in the u.s. so that's in cupertino, in austin and the displays come from japan and korea. but it does assemble products in china. meaning fiphysically putting
together different parts that work does employ millions of chinese, so like many other companies, that does make apple potentially vulnerable to price increases if you saw this tariff placed on chinese exports, but it's uncloer which apple product would be really affected here. analysts remind us apple has successfully argued its case last year when the ustr removed devices that receive and transmit data, that would have included the apple watch and air pods sending a letter to the government saying a tariff would hurt its contribution to the u.s. economy back the to you. >> thanks. we'll switch gear to a news alert on facebook. julia boorstin has the latest there. what's happening >> facebook shares moving to fresh session lows and a "wall street journal" report that the ftc is is examining whether
facebook brought companies to yutallize rivals facebook disclosed last week the ftc had been conducting an antitrust investigation. the investigation is is reportedly focussing on the acquisition practices, looking at purchases of instagram, which was acquired for $1 billion and what's app the question is whether mark zuckerberg purchased these companies to e prevent them from challenging facebook sources say facebook is likely to argue these companies were able the scale as quickly as they did because of facebook's ownership. we've reached out to both facebook and the ftc they have no comment back to you. >> this is separate from the matter they settled over privacy a couple of weeks ago and takes it off in a different direction. >> exactly yes, so we reported a couple of months ago that the ftc was looking into whether they would
be investigating facebook from an antitrust perspective they split up the investigation so the ftc was in charge of the ante trust examination of facebook then facebook disclosed last week when they settled that $5 billion fine, they also billion they disclosed the ftc was, in fact, investigating antitrust, potential antitrust violations, at the company so that's when we learned there was an antitrust work under way on behalf of the ftc this is totally separate from the $5 billion settlement that is about consumer and privacy this is about antitrust. >> thank you very much, julia boorstin retail stocks hit on the iccod f these tariff headlines whh ulbe most at risk? we will dig in on that one next. (lively music)
welcome back president trump has announced new tariffs on china beginning september 1st, expanding them to $300 billion worth of goods. look at the reaction across retail especially for nike and best buy best buy shares are down nearly 9% brian nagle is on the line from oppenheimer. why is best buy taking this so hard >> good afternoon. i think the easy answer is, when
we think about additional tariffs, particularly the last round which is much more consumer than industrial focused, in many ways best buy is in the cross hairs of that. we're across retail and i've discussed this on your show in the past so far these retailers, for the most part, have been dealing pretty well with the tariffs this last round is much more consumer focused with best buy sells the category that is largely imported, a big chunk from china we don't know how much it's more of a price sensitive category than other areas such as home improvement or autoparts and categories such as that. >> so 10% sounds like a lot, but it is also a little in the grand scheme of things, frankly. and what wiggle room would best buy have with its suppliers either to pass these costs on to consumers, to eat them, or to share them with the supplier
>> that's a great question, and as investors in this category, we've been watching this for a while. we are trying to make sense of the 25% tariff on these last $300 billion tyler, 10% is not as bad, likely much more manageable the question for best buy is going to come down to exactly what you said. where do they have pricing power? where could they pass these costs to consumers or could they push back or negotiate with suppliers? that's what they'll be deciding. you're correct when you say i don't want to minimize the 10% it's not the 25% we were fearing. >> not to mention best buy would seem to have earned the reputation for being one of the players with market power, with pricing power, one of the market leaders. after everything they've done to fend off amazon and make it in today's retail environment, why is it when a stock like home
depot is negative on this best buy is perceived as taking a bigger hit is this a direct translation to your forecast for earnings, revenue and so forth >> well, look, a lot of it goes back to the nature of the category i agree completely best buy is very much the last man standing within the consumer electronics category a very well run company. within consumer electronics it is more of a discretionary purchase and we've seen it across the sector with online commerce, a price transparency out there consumers look more at the price of consumer electronics. home depot, they have a lot more ability to pass along higher prices without the consumer really even knowing. they sell a wide array of products products are geared towards projects there's items within the projects, nails and most people don't know how much they cost anyway >> no, that's fair enough.
like you said, everyone else, meanwhile, has the comp screen of their flat screen cost when they make the purchase thanks, brian, for phoning in and joining us today appreciate it. brian nagle of oppenheimer with best buy down. a wild day for the market. the dow has been trading in a 600-point range. we're way down from the highs, lower by 200 points. l t you set up for the close after this
the last couple of days. >> certainly have. if you thought it was all about interest rates and the fed, today was a wake-up call certainly the fed was pointing to trade tensions as one of the reasons it did what it did yesterday. i suppose if there's a silver lining there, the trade tensions are still there, it might mean more rate cuts are on the way. >> by the way, the jobs report tomorrow morning thanks for watching. >> "closing bell" right now. good afternoon welcome to "the closing bell." stocks plunging interday this brings consumer stocks into the bargain. nike down, near the bottom of the dow, seeing a 600-point swing. >> welcome, everyone, to the final hour of trade. what is driving the action stocks plunging after president trump set a new 10% tariff will be placed on the remaining $300 billion worth of goods that come